Bluetooth: host: bt_conn_auth_cb callbacks are not called when pairing to BLE 4.1 central in BT_SECURITY_L4 mode.

[Xeenych]

I'n using peripheral_lbs from Nordic nRF Connect SDK on nRF52840dk board.
I have Android phone Samsung Galaxy J1. It has BLE 4.1 only.

I've set secuirity level to BT_SECUIRITY_L4

static void connected(struct bt_conn *conn, uint8_t err)
{
    if (err) {
	printk("Connection failed (err %u)\n", err);
	return;
    }

    printk("Connected\n");

    int sec_result = bt_conn_set_security(conn, BT_SECURITY_L4);
    printk("Security level, err %d\n", sec_result);
          
    dk_set_led_on(CON_STATUS_LED);
}

On a smartphone I run nRFConnect app and try to pair with DK board.
Pairing fails because BLE 4.1 doesn't support LESC pairing (BT_SECURITY_L4) but

Board shows that the "secuirity_changed" callback called and then immediately "disconnected" callback.

Passkey for d0:1d:c1:85:77:9b (random): 786779
[00:00:12.933,227] [1;31m<err> bt_hci_core: Failed to set required security level
[00:00:12.941,314] [1;31m<err> bt_conn: not connected
[00:00:12.946,960] [1;31m<err> bt_conn: not connected
Security changed: d0:1d:c1:85:77:9b (random) level 3
Disconnected (reason 22)

Expected behavior
I expect bt_conn_auth callbacks like "cancel" or "pairing_failed" to be called but they are not.

Workaround:
Handle in-progress pairing as failed in disconnected callback if pairing_failed has not been called yet

[joerchan]

Same issue exists also when required BT_SECURITY_L3 and peer does not have MITM flag set.
Can be reproduced with two shell instances when peer side has not set any authentication callbacks that makes it MITM capable

Remote:

bt init
bt advertise on identity

Local:

bt init
bt auth all
bt connect <addr>
bt security 3

Original issue can be reproduced with two shell instances, remote with BT_TINYCRYPT_ECC=n

Remote:

bt init
bt auth all
bt advertise on identity

Local:

bt init
bt auth all
bt connect <addr>
bt security 4